The former managers of defunct hedge fund Quantek Asset Management have settled allegations that they lied to investors.

Javier Guerra and Ralph Patino agreed to pay $3.1 million in disgorgement and penatlies, although neither admitted or denied any wrongdoing at Miami-based Quantek. The hedge fund is in liquidation, and Guerra resigned from the firm last year after an arbitration panel found that he had made misleading statements about the once-$1 billion fund.

According to the Securities and Exchange Commission, Guerra and Patino lied to investors about their own investments in Quantek, which the regulator says did not exist, and about loans made to several entities related to Guerra.

"When making an investment decision, private fund investors are entitled to the unvarnished truth about material information such as management's skin in the game or the adviser's handling of related-party transactions," Bruce Karpati, co-head of the SEC's asset management enforcement division, said.

In addition to the fines and disgorgement, Guerra accepted a five-year ban and Patino a one-year ban.

"I am proud of what we achieved at Quantek," Guerra said in a statement.

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